SELF-PACED LEARNING MODULE

COLLEGE DEPARTMENT

MODULE 1
Subject:

BASIC FINANCE

AISAT COLLEGE – DASMARIÑAS, INC.

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 Unit Basic Finance
Module Fundamental Concepts of Basic Finance
AE-BF1 Basic Finance 1 Units: 3 Page |2

INFORMATION SHEET PR-1.1.1

“BASIC CONCEPTS OF FINANCE”

This module is an attempt to present the fundamental concepts and some related terms related to Basic
Finance.

BASIC CONCEPTS
Terms, unless they are clearly defined, are sometimes confusing. As some of them are related, it
is important to define them and discuss their relationships with other relevant terms.

FINANCE
Finance may be defined as the study of the acquisition and investment of cash for the purpose
of enhancing value and wealth.

Categories of Finance. Finance, in general, is divided into categories according to the type of entity or
organization served. They are the following:
1. Public finance- category of general finance, which deals with the revenue and expenditure
patterns of the government and their various effects on the economy.
2. Private finance- category deals with the area of general finance not classified under public
finance. It is subdivided into the following:
a. Personal finance;
b. The finance of non-profit organizations; and
c. Business finance.

Personal finance is concerned with the fundamentals of managing one’s own personal money affairs.

The finance of non-profit organizations includes private undertaking such as charity, religion, and some
private educational institutions.

The term Business Finance refers to the provision of money for commercial use. Business finance,
however, is more than just the provision of money. It is also concerned with the effective use of funds.
As such, it covers the financial management of private profit-seeking concerns in the business of service,
trade, manufacturing, mining, public utilities, and financing. With the foregoing requirements, business
finance may be defined as the procurement and administration of funds with the view of achieving the
objectives of the business. Specifically, however, business finance may be concerned with three aspects:
1. Small business finance;
2. Corporation finance; and
3. Multinational business finance.

SUBJECT TEACHER: APPROVED FOR IMPLEMENTATION:

MODULE 1st – 3rd
PRELIM
1 Meeting MS. NEMIE A. OBLEA MR. WILBERT A. MAÑUSCA
Subject Teacher School Director
 Unit Basic Finance
Module Fundamental Concepts of Basic Finance
AE-BF1 Basic Finance 1 Units: 3 Page |3

FINANCE

Private
Public Finance
Finance

Finance of
Personal Business
Non-profit
Finance Finance
Organizations

Small Multi-national
Corporation
Business Business
Finance
Finance Finance

SUBJECT TEACHER: APPROVED FOR IMPLEMENTATION:

MODULE 1st – 3rd
PRELIM
1 Meeting MS. NEMIE A. OBLEA MR. WILBERT A. MAÑUSCA
Subject Teacher School Director
 Unit Basic Finance
Module Fundamental Concepts of Basic Finance
AE-BF1 Basic Finance 1 Units: 3 Page |4

THE GOALS OF BUSINESS FINANCE

Private business is established primarily for profit. This end, however, can be achieved by the
effective management of the various business functions. One of these is the finance function.
Like the other functions, it has itws own goals. The goals of business finance are variously
expressed as follows:
1. Maximizing profit;
2. Maximizing profitability;
3. Maximizing profit subject to cash constraint;
4. Maximizing net present worth; and
5. Seeking an optimum position along a risk-return frontier.

WHAT ARE THE FINANCIAL STATEMENTS PREPARED IN ACCOUNTING?

The three primary information needed by the users relate to

1. Financial Performance ( Income Statement) also called Profit or Loss Statement or Statement of
Earnings. - report which describes how business operated or produced wealth over a given
period of time.

2. Financial Position ( formerly called the balance sheet ) show how healthy or robust the
enterprise when it shows a listing of accumulated resources (cash and properties)
After deducting the liabilities (debts or obligations to pay). After deducting the liabilities from
the assets, the net assets shows the new value or net worth of the firm which belong to the
owner.
Statement of Changes in Owner’s Equity is another report prepared by the accountant which
explain the activities for a period of time that caused the owner’s equity to change.

3. Cash Flow Statement of the business is a financial statement which explains why the amount of
cash changed over a period of time. The report makes a listing of the cash inflow activities (cash
receipts) and the cash outflow (cash payments) of the business.

SUBJECT TEACHER: APPROVED FOR IMPLEMENTATION:

MODULE 1st – 3rd
PRELIM
1 Meeting MS. NEMIE A. OBLEA MR. WILBERT A. MAÑUSCA
Subject Teacher School Director
 Unit Basic Finance
Module Fundamental Concepts of Basic Finance
AE-BF1 Basic Finance 1 Units: 3 Page |5

SELF-CHECK QUESTIONS PR-1.1.1.

“Basic “

Directions:

A. Identification: Answer the following questions based on how you understand the topic
discussed.

Accounting 1. Known as a language of business

Luca Pacioli 2. Father of Accounting

Business/Trade 3. An economic activity of buying and selling in order to obtain profit

Limited or inexact knowledge 4. Element of uncertainty in an outcome

Accounting Cycle 5. An orderly way of accumulating and reporting business transactions

B. Simple Illustration: Financial Statements Prepared in Accounting

Ms. Santos got her retirement pay of ₱ 420,000 and thought of putting up a Photocopy Service
Center. She invested, ₱ 350,000 on June 1 to purchase a reproducing machine for ₱ 300,000
and paper and ink for ₱20,000. She set aside the remaining ₱ 30,000 as cash fund of the
business. During the month of June, reproduction of documents brought in cash sales of ₱
48,000. 40% of the supplies were used up and rent was paid for ₱ 5,000.

Required: Prepare a simple financial statement

SUBJECT TEACHER: APPROVED FOR IMPLEMENTATION:

MODULE 1st – 3rd
PRELIM
1 Meeting MS. NEMIE A. OBLEA MR. WILBERT A. MAÑUSCA
Subject Teacher School Director
 Unit Basic Finance
Module Fundamental Concepts of Basic Finance
AE-BF1 Basic Finance 1 Units: 3 Page |6

SUBJECT TEACHER: APPROVED FOR IMPLEMENTATION:

MODULE 1st – 3rd
PRELIM
1 Meeting MS. NEMIE A. OBLEA MR. WILBERT A. MAÑUSCA
Subject Teacher School Director
 Unit Basic Finance
Module Fundamental Concepts of Basic Finance
AE-BF1 Basic Finance 1 Units: 3 Page |7

STUDENT NAME: __________________________________ SECTION: __________________

PERFORMANCE TASK PR-1.1.1

PERFORMANCE TASK TITLE: : BUSINESS SETTING-FORM OF ORGANIZATIONS

PERFORMANCE OBJECTIVE: After completing this performance task, you were being knowledgeable in
business setting, form of organization and able to identify the importance of accounting as a
language of business.
TOOLS AND MATERIALS: Modules, newspapers, magazines, internet resources.

EQUIPMENT : none

ESTIMATED COST : none

PROCESS / PROCEDURE

1. Interview a relative or a friend who has a business. Answer the following requirements.
a. Company’s name, location, and form of organization
b. Type of business and specify the goods or services being sold.
c. Initial capital, requirement (if new) or present net worth ( if already existing)
d. Reasons for putting up the business.
e. Major customers and competitors
f. Current problems confronting the business.

Alternatively, look for a service provider, or merchandiser or manufacturer using the internet.
Answer the above requirements.

Instructions :
1. You may prepare it either typed written or written report. Write it legibly.
2. Use short bond paper only. ( maximum of 2 pages only)
3. Tasks must be neat and presentable. Avoid erasures.

PRECAUTIONS : • Indicate references in your performance task (i.e., https//www.wikipedia.com, etc…)

•Avoid copy and paste performance task of other
ASSESSMENT METHOD : PERFORMANCE TASK CRITERIA CHECKLIST

STUDENT NAME: _____________________________________ SECTION: ___________

SUBJECT TEACHER: APPROVED FOR IMPLEMENTATION:
MODULE 1st – 3rd
PRELIM
1 Meeting MS. NEMIE A. OBLEA MR. WILBERT A. MAÑUSCA
Subject Teacher School Director
 Unit Basic Finance
Module Fundamental Concepts of Basic Finance
AE-BF1 Basic Finance 1 Units: 3 Page |8

PERFORMANCE TASK CRITERIA CHECKLIST PR-1-1.1

Did I … CRITERIA SCORING
1 2 3 4 5
1. Logic and key points. All corresponding ideas about the topic are
logically presented.
2. Content. Content of the essay flows and is passionate.
3. Cleanliness. Very clean and well presented.
4. Spelling and Grammar. No error in spelling and grammar.
5. Word usage. Word choice and usage are professionals.

GRADES

Teacher’s Remarks □ Quiz □ Recitation □ Project

5 - Excellently Performed
4 - Very Satisfactory Performed
3 - Satisfactory Performed
2 - Fairly Performed
1 - Poorly Performed

STUDENT NAME: _____________________________________ SECTION: ___________

SUBJECT TEACHER: APPROVED FOR IMPLEMENTATION:
MODULE 1st – 3rd
PRELIM
1 Meeting MS. NEMIE A. OBLEA MR. WILBERT A. MAÑUSCA
Subject Teacher School Director
 Unit Basic Finance
Module Fundamental Concepts of Basic Finance
AE-BF1 Basic Finance 1 Units: 3 Page |9

WRITTEN WORK PR-1.1.1

Written Work Title : Preparation of Financial Statement
Written Task Objective : ▪ After completing this written work, you were being knowledgeable on how
to analyze and prepare simple financial statements.

Questions : Continue with Santos illustration, refer to self-check question, pages 11 and 12 of Module
1

The following transactions took place for the month of July. Sales amounted to ₱ 52,000. Paper
and ink were purchase and paid for ₱ 10,000. Total supplies available amounted to ₱ 22,000 half of
which were use up. Monthly rent was again paid. Santos made a ₱ 5,000 cash withdrawal.

Required. Prepare a simple financial statements

a. Statement of Income
b. Statement of Changes in Equity for July
c. Statement of Financial Position
d. Statement of Cash Flow

Note: Use extra sheet of paper for your answer.

Write legibly your answer. Avoid erasure.
Assessment Method : Written Work Criteria Checklist

SUBJECT TEACHER: APPROVED FOR IMPLEMENTATION:

MODULE 1st – 3rd
PRELIM
1 Meeting MS. NEMIE A. OBLEA MR. WILBERT A. MAÑUSCA
Subject Teacher School Director
 Unit Basic Finance
Module Fundamental Concepts of Basic Finance
AE-BF1 Basic Finance 1 Units: 3 P a g e | 10

STUDENT NAME: _____________________________________ SECTION: ___________

WRITTEN OUTPUT CRITERIA CHECKLIST PR-1-1.1

Did I … CRITERIA SCORING
1 2 3 4 5
1. Logic and key points. All ideas are logically presented.
2. Content. Content of the essay flows and is passionate.
3. Cleanliness. Very clean and well presented.
4. Spelling and Grammar. No error in spelling and grammar.
5. Word usage. Word choice and usage are professionals.

GRADES

Teacher’s Remarks □ Quiz □ Recitation □ Project

5 - Excellently Written
4 - Very Satisfactory Written
3 - Satisfactory Written
2 - Fairly Written
1 - Poorly Written

SUBJECT TEACHER: APPROVED FOR IMPLEMENTATION:

MODULE 1st – 3rd
PRELIM
1 Meeting MS. NEMIE A. OBLEA MR. WILBERT A. MAÑUSCA
Subject Teacher School Director